What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 78 added, 53 removed, 408 unchanged (24% of the section changed)

3 unchanged sentences

in thousands, except per share data)

June 30, December 31,

September 30, December 31,

Current assets:

27 unchanged sentences

59,780 shares authorized;

9,705 issued and 9,619 outstanding as of June 30, 2024;

9,742 issued and 9,656 outstanding as of September 30, 2024;

9,525 issued and 9,440 outstanding as of December 31, 2023

1 unchanged sentence

$ 0.01 par value;

220 shares authorized, issued, and outstanding as of June 30, 2024 and December 31, 2023

220 shares authorized, issued, and outstanding as of September 30, 2024 and December 31, 2023

Additional paid-in capital 202,348 202,112

8 unchanged sentences

in thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

26 unchanged sentences

Shares Amount Shares Amount APIC stock deficit Total

Three and Six Months Ended June 30, 2024

Three and Nine Months Ended September 30, 2024

Balance as of December 31, 2023 9,525 $ 94 220 $ 2 $ 202,112 $ ( 2,662 ) $ ( 162,330 ) $ 37,216

7 unchanged sentences

Balance as of June 30, 2024 9,705 $ 96 220 $ 2 $ 202,205 $ ( 2,662 ) $ ( 160,474 ) $ 39,167

Three and Six Months Ended June 30, 2023

Issuance of common stock, net of shares withheld for taxes 34 — — — ( 62 ) — — ( 62 )

Stock-based compensation 3 — — — 205 — — 205

Net income (loss) — — — — — — 2,377 2,377

Balance as of September 30, 2024 9,742 $ 96 220 $ 2 $ 202,348 $ ( 2,662 ) $ ( 158,097 ) $ 41,687

Three and Nine Months Ended September 30, 2023

Balance as of December 31, 2022 9,337 $ 93 220 $ 2 $ 201,535 $ ( 2,662 ) $ ( 170,114 ) $ 28,854

7 unchanged sentences

Balance as of June 30, 2023 9,511 $ 94 220 $ 2 $ 201,649 $ ( 2,662 ) $ ( 168,885 ) $ 30,198

Issuance of common stock, net of shares withheld for taxes — — — — — — — —

Stock-based compensation 6 — — — 273 — — 273

Net income (loss) — — — — — — 4,685 4,685

Balance as of September 30, 2023 9,517 $ 94 220 $ 2 $ 201,922 $ ( 2,662 ) $ ( 164,200 ) $ 35,156

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

23 unchanged sentences

Financing Activities

Proceeds from issuance of common stock related to equity awards 58 —

Payment of taxes related to the net share settlement of equity awards ( 561 ) ( 390 )

55 unchanged sentences

The following table summarizes the Company's investments in real estate ventures that are recorded on the consolidated balance sheets (in thousands):

June 30, December 31,

September 30, December 31,

Investment Ownership % 2024 2023 Accounting Method

10 unchanged sentences

("Investors X"), an unconsolidated variable interest entity that owns the Company's residual homebuilding operations.

As of June 30, 2024, all residential lots have been sold.

The proceeds from the sales will be released as land development work associated with these projects is completed.

As of September 30, 2024, all residential lots have been sold.

The proceeds from the sales will be distributed as land development work associated with these projects is completed.

(See Note 12 for additional information).

4 unchanged sentences

In February 2020, the Company arranged for DivcoWest to purchase a majority ownership stake in The Hartford and secured a $ 87.0 million loan facility from MetLife.

As part of the transaction, the Company entered into asset management and property management agreements to manage the property in exchange for market-rate fees, for which it recognized $ 0.2 million and $ 0.5 million of revenue for the three and six months ended June 30, 2024, respectively.

Fair value of the property is determined on a quarterly basis using an income approach and sales comparable approach model.

As of June 30, 2024, the Company’s ownership interest in the Hartford was 2.5 %.

As part of the transaction, the Company entered into asset management and property management agreements to manage the property in exchange for market-rate fees, for which it recognized $ 0.4 million and $ 0.8 million of revenue for the three and nine months ended September 30, 2024, respectively.

Fair value of the property is determined on a quarterly basis using an income approach model.

As of September 30, 2024, the Company’s ownership interest in the Hartford was 2.5 %.

(See Note 12 for additional information).

3 unchanged sentences

In connection with the transaction, the Company received an acquisition fee and is entitled to receive investment related income and promote distributions in connection with its equity interest in the asset.

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market-rate fees, for which it recognized $ 0.3 million and $ 0.7 million of revenue for the three and six months ended June 30, 2024, respectively.

Fair value of the property is determined on a quarterly basis using an income approach and sales comparable approach model.

As of June 30, 2024, the Company’s ownership interest in BLVD Forty Four was 5.0 %.

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market-rate fees, for which it recognized $ 0.4 million and $ 1.0 million of revenue for the three and nine months ended September 30, 2024, respectively.

Fair value of the property is determined on a quarterly basis using an income approach model.

As of September 30, 2024, the Company’s ownership interest in BLVD Forty Four was 5.0 %.

(See Note 12 for additional information).

2 unchanged sentences

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market-rate fees, for which it recognized $ 0.3 million and $ 0.6 million of revenue for the three and six months ended June 30, 2024, respectively.

Fair value is determined on a quarterly basis using an income approach and sales comparable approach model.

As of June 30, 2024, the Company’s ownership interest in BLVD Ansel was 5.0 %.

The Company also provides asset, residential, retail and parking property management services for the property in exchange for market-rate fees, for which it recognized $ 0.3 million and $ 0.9 million of revenue for the three and nine months ended September 30, 2024, respectively.

Fair value is determined on a quarterly basis using an income approach model.

As of September 30, 2024, the Company’s ownership interest in BLVD Ansel was 5.0 %.

(See Note 12 for additional information).

4 unchanged sentences

Change in fair value ( 350 )

Balance as of June 30, 2024 $ 4,666

Balance as of September 30, 2024 $ 4,583

In December 2023, the Company completed the acquisition of an 18,150 square foot land parcel located at 41 Maryland Avenue in Rockville, Maryland (“Comstock 41”) through a wholly owned subsidiary for $ 1.5 million.

7 unchanged sentences

The carrying value of the STS investment is recorded in "other assets" on the Company's consolidated statement of balance sheets.

The Company's proportionate share of STS net income and distributions are recorded in gain (loss) on real estate ventures in the consolidated statements of operations and was immaterial for the six months ended June 30, 2024 and 2023 .

The Company has operating leases for office space leased in various buildings for its own use.

4 unchanged sentences

The following table summarizes operating lease costs, by type (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

The following table presents supplemental cash flow information related to the Company's operating leases (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

Operating cash flows from operating leases $ 395 $ 391 $ 1,170 $ 1,191

As of June 30, 2024, the Company's operating leases had a weighted-average remaining lease term of 6.3 years and a weighted-average discount rate of 4.64 %.

As of September 30, 2024, the Company's operating leases had a weighted-average remaining lease term of 6.0 years and a weighted-average discount rate of 4.64 %.

The following table summarizes future lease payments (in thousands):

5 unchanged sentences

Total lease liabilities $ 6,490

The Company does not have any leases which have not yet commenced as of June 30, 2024.

The Company does not have any leases which have not yet commenced as of September 30, 2024.

In March 2020, the Company entered into a five-year Revolving Capital Line of Credit Agreement with CPRES, pursuant to which the Company secured a $ 10.0 million capital line of credit with a variable interest rate of the Wall Street Journal Prime Rate plus 1.00 % per annum (the “Credit Facility”).

As of June 30, 2024, the full balance of the Credit Facility remained available for use up through the March 19, 2025 expiration date, and the Company had no outstanding debt or financing arrangements for which future payments are due.

As of September 30, 2024, the full balance of the Credit Facility remained available for use up through the March 19, 2025 expiration date, and the Company had no outstanding debt or financing arrangements for which future payments are due.

Commitments and Contingencies

7 unchanged sentences

Fair Value Disclosures

As of June 30, 2024, the carrying amount of cash and cash equivalents, accounts receivable, other current assets, and accounts payable approximated fair value because of the short-term nature of these instruments.

As of June 30, 2024, deferred compensation plan assets, which are Company-funded investments that are meant to correlate with participant-directed hypothetical investments in stock and bond mutual funds, are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held (Level 1).

As of September 30, 2024, the carrying amount of cash and cash equivalents, accounts receivable, other current assets, and accounts payable approximated fair value because of the short-term nature of these instruments.

As of September 30, 2024, deferred compensation plan assets, which are Company-funded investments that are meant to correlate with participant-directed hypothetical investments in stock and bond mutual funds, are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held (Level 1).

Corresponding deferred compensation plan liabilities reflect the fair value of the aforementioned hypothetical investments and are based on inputs derived principally from observable market data (Level 2) through their direct correlation with the deferred compensation plan assets.

As of June 30, 2024, the Company had certain equity method investments in real estate ventures that it elected to record at fair value using significant unobservable inputs (Level 3).

As of September 30, 2024, the Company had certain equity method investments in real estate ventures that it elected to record at fair value using significant unobservable inputs (Level 3).

(See Note 3 for additional information).

6 unchanged sentences

Shares of our Class B common stock are convertible into an equivalent number of shares of our Class A common stock upon transfer.

As of June 30, 2024, the Company had not declared any dividends.

As of September 30, 2024, the Company had not declared any dividends.

Stock-based Compensation

3 unchanged sentences

The 2019 Plan originally authorized 2.5 million shares of the Company's Class A common stock for issuance.

As of June 30, 2024, there were 1.3 million shares of Class A common stock available for issuance under the 2019 Plan.

During the three and six months ended June 30, 2024, the Company recorded stock-based compensation expense of $ 0.3 million and $ 0.5 million, respectively.

During the three and six months ended June 30, 2023, the Company recorded stock-based compensation expense of $ 0.3 million and $ 0.5 million, respectively.

As of September 30, 2024, there were 1.3 million shares of Class A common stock available for issuance under the 2019 Plan.

During the three and nine months ended September 30, 2024, the Company recorded stock-based compensation expense of $ 0.2 million and $ 0.7 million, respectively.

During the three and nine months ended September 30, 2023, the Company recorded stock-based compensation expense of $ 0.3 million and $ 0.8 million, respectively.

Stock-based compensation costs are included in selling, general, and administrative expense on the Company's consolidated statements of operations.

As of June 30, 2024, there was $ 1.3 million of total unrecognized stock-based compensation, which is expected to be recognized over a weighted-average period of 2.0 years.

As of September 30, 2024, there was $ 1.0 million of total unrecognized stock-based compensation, which is expected to be recognized over a weighted-average period of 1.9 years.

Restricted Stock Units

10 unchanged sentences

Canceled/Forfeited ( 63 ) 4.24

Balance as of June 30, 2024 622 $ 3.99

Vested and expected to vest after June 30, 2024 619 3.99

Balance as of September 30, 2024 558 $ 4.12

Vested and expected to vest after September 30, 2024 556 4.11

Represents additional restricted stock units that vested and were released as a result of the satisfaction of a performance vesting condition.

The total intrinsic value of RSUs that vested during the six months ended June 30, 2024 and 2023 was $ 1.2 million and $ 1.1 million, respectively.

The total intrinsic value of RSUs that vested during the nine months ended September 30, 2024 and 2023 was $ 1.5 million and $ 1.1 million, respectively.

Stock Options

7 unchanged sentences

Canceled/Forfeited — —

Balance as of June 30, 2024 108 $ 3.17 3.3 $ 361

Exercisable as of June 30, 2024 108 $ 3.17 3.3 $ 361

The total intrinsic value of stock options exercised during the six months ended June 30, 2024 was immaterial.

Balance as of September 30, 2024 97 $ 3.09 3.2 $ 667

Exercisable as of September 30, 2024 97 $ 3.09 3.2 $ 667

The total intrinsic value of stock options exercised during the nine months ended September 30, 2024 was $ 0.1 million.

There were no stock options exercised in 2023.

All of the Company's revenue for the three and six months ended June 30, 2024 and 2023 was generated in the United States.

All of the Company's revenue for the three and nine months ended September 30, 2024 and 2023 was generated in the United States.

The following tables summarize the Company’s revenue by line of business, customer type, and contract fee type (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

Total revenue $ 12,995 $ 14,463 $ 34,386 $ 33,705

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Total revenue $ 12,995 $ 14,463 $ 34,386 $ 33,705

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

Certain contracts contain multiple revenue streams with characteristics that lend to classification in more than one category

Pursuant to the terms of the asset management agreement with CP dated as of June 13, 2022 (the "2022 AMA"), the Company may earn and recognize incentive fee revenue for certain commercial assets in its managed portfolio based on specific dates and measurement criteria that are defined in the agreement.

(See Note 12 for additional information).

On September 11, 2024, the Company entered into an amendment to the 2022 AMA that deferred an incentive fee trigger event for seven specified commercial assets in its managed portfolio.

The amendment modified the trigger event originally scheduled on October 1, 2024 to be, at the election of the Company upon the occurrence of the event and with consent from CP, either (a) October 1, 2027, (b) upon the sale of the asset, (c) upon the refinance of the asset, or (d) the period of time in which an 85 % leased rate has been achieved if the asset is a commercial asset.

(See Note 12 for additional information).

The Company recognized no revenue from incentive fees for the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2023, the Company recognized revenue from incentive fees of $ 4.8 million, stemming from triggering events for three operating assets on October 1, 2023 pursuant to the original terms of the 2022 AMA.

These operating asset triggering events were part of a series of annual operating asset triggering events that began on October 1, 2022 and were scheduled each October 1 through 2024 prior to the aforementioned 2022 AMA amendment.

All incentive fees recognized in fiscal year 2023 were related to services performed in prior periods for which revenue recognition criteria were previously constrained.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

2 unchanged sentences

The Company's effective tax rate in any given period is directly impacted by the timing and magnitude of any partial valuation allowance releases.

The Company's effective tax rates for the three and six months ended June 30, 2024 and 2023 differ from the U.S.

The Company's effective tax rates for the three and nine months ended September 30, 2024 differ from the U.S.

federal statutory tax rate of 21%, primarily due to impact of state income taxes and stock compensation shortfall/windfall adjustments.

The Company's effective tax rates for the three and nine months ended September 30, 2023 differ from the standard federal tax rate of 21% primarily due to the impact of a $ 1.4 million valuation release as well as state income taxes and stock compensation shortfall/windfall adjustments.

Net Income (Loss) Per Share

The following table sets forth the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

7 unchanged sentences

The following common share equivalents have been excluded from the computation of diluted net income (loss) per share because their effect was anti-dilutive (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

In June 2022, CHCI Asset Management, L.C.

(“CAM”), an entity wholly owned by the Company, entered into a new master asset management agreement with CP (the “2022 AMA”) that superseded in its entirety the previous asset management agreement between CAM and CPRES dated April 30, 2019 (the “2019 AMA”).

(“CAM”), an entity wholly owned by the Company, entered into a master asset management agreement with CP (the “2022 AMA”) that superseded in its entirety the previous asset management agreement between CAM and CPRES dated April 30, 2019 (the “2019 AMA”).

Entry into the 2022 AMA was unanimously approved by the independent directors of the Company.

Consistent with the structure of the 2019 AMA, the 2022 AMA engages CAM to manage and administer CP’s commercial real estate portfolio (the "Anchor Portfolio") and the day to-day operations of CP and each property-owning subsidiary of CP (collectively, the “CP Entities”).

CAM will provide investment advisory, development, and asset management services necessary to build out, stabilize and manage the Anchor Portfolio, which currently consists primarily of two of the larger transit-oriented, mixed-use developments located on Washington D.C.

Consistent with the structure of the 2019 AMA, the 2022 AMA engaged CAM to manage and administer CP’s commercial real estate portfolio (the "Anchor Portfolio") and the day to-day operations of CP and each property-owning subsidiary of CP (collectively, the “CP Entities”).

CAM will provide investment advisory, development, and asset management services necessary

to build out, stabilize and manage the Anchor Portfolio, which currently consists primarily of two of the larger transit-oriented, mixed-use developments located on Washington D.C.

Metro’s Silver Line (Reston Station and Loudoun Station) that are owned by CP Entities and ultimately controlled by Mr.

28 unchanged sentences

In the event of such a termination and in addition to the payment of any accrued annual fees due and payable as of the termination date under the 2022 AMA, CP is required to pay a termination fee equal to two times the Cost-Plus Fee or Market Rate Fee paid to CAM for the calendar year immediately preceding the termination.

On September 11, 2024, the Company entered into an amendment to the 2022 AMA with an effective date of July 1, 2024 (the "First Amendment") that included, among others, the following key revised provisions:

• A deferral of the Operating Assets Trigger Event that was originally scheduled on October 1, 2024 (as defined in the original 2022 AMA) to calculate incentive fee revenue for seven specified managed portfolio assets to be, at the election of the Company upon the occurrence of the event and with consent from CP, either (a) October 1, 2027, (b) upon the sale

of the asset, (c) upon the refinance of the asset, or (d) the period of time in which an 85 % leased rate has been achieved if the asset is a commercial asset;

• A revised definition of the Development and Construction Management Fee to include payment of the fee during delays in delivery caused by a casualty event;

• A revised definition of Supplemental Fees to include a lease termination fee equal to 3.50 % of the gross rental revenue paid by any tenant of a commercial asset in connection with the early termination of a lease.

Except as amended by the First Amendment, the original terms of the 2022 AMA remain in full force and effect.

Residential, Commercial, and Parking Property Management Agreements

17 unchanged sentences

The BC Management Agreement is structured in successive renewable one-year terms.

The BC Management Agreement provides that DCS Real Estate Investments, LC will pay CAM an annual management fee equal to $ 0.4 million, payable in equal monthly installments and will reimburse CAM for certain expenses.

The BC Management Agreement provides that DCS Real Estate Investments, LC will pay CAM an annual management fee equal to $ 0.4 million that is payable in equal monthly installments and will reimburse CAM for certain expenses.

On February 1, 2024, CAM entered into a Business Management Agreement (the “SH Management Agreement”) with Springfield Holdings, LLC (“Springfield”), an entity controlled by a member of CP, whereby CAM provides Springfield with professional management and consultation on land development and real estate transactions for a residential community located in Ranson, West Virginia.

10 unchanged sentences

BLVD Forty Four/BLVD Ansel

In October 2021 and March 2022, the Company entered into joint ventures with CP to acquire BLVD Forty Four and BLVD Ansel, respectively, two adjacent mixed-use luxury high-rise apartment buildings located near the Rockville Metro Station in

Rockville, Maryland.

The Company considers BLVD Forty Four and BLVD Ansel to be variable interest entities upon which it exercises significant influence;

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements